Bermuda’s Alliance In Russian Venture

December 20, 2011

Bermuda-based Alliance Oil Co. Ltd., with operations in Russia and Kazakhstan, today [Dec. 20] said it has agreed to form a joint venture with Spanish oil and gas giant Repsol YPF SA for exploration and production growth in Russia. Alliance and Repsol will own 51 percent and 49 percent stake in the JV respectively.

The joint venture will have a total asset base of about $840 million following asset and cash contributions by shareholders.

Repsol will raise capital and also pay cash to Alliance for its 49 percent participation in the joint venture.

Asset contribution of Alliance is valued at $570 million. As per the collaboration deal, Alliance will transfer its upstream subsidiaries Saneco and Tatnefteodatcha, which comprise exploration and production licenses at 14 fields with proven and probable oil reserves of 171.5 million barrels as of December 31, 2010 and current production of around 20,500 barrels of oil per day.

The joint venture will also have preferential rights related to new upstream business opportunities identified by either Alliance or Repsol in Russia.

The agreement, signed by Antonio Brufau, Chairman of Repsol and Alliance Group Chairman Musa Bazhaev, is expected to result in a combination of Alliance’s knowledge and access to exploration and production business opportunities in Russia, with Repsol’s technological and financing capabilities.

Antonio Brufau stated, “This alliance will grant Repsol immediate access to producing assets in Russia, one of the world’s largest hydrocarbon resource holders. We are certain that Alliance Oil’s local expertise and Repsol’s technological capabilities and know-how will provide a solid foundation for future growth in Russia.”

Eric Forss, Chairman of Alliance Oil, said, “The creation of the joint venture will allow us to further expand our upstream operations in Russia through joint exploitation of the Volga-Urals assets and realization of new business opportunities. Repsol is an international leader in oil and gas management, technology and financing and we now have the opportunity to share these resources with common objectives.”

The formation of the joint venture is pending regulatory approval.

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